Responding to a national call to make higher education more affordable and more accessible to students, Southwestern has joined with more than 220 other private colleges and universities across the state and nation to offer an income tax-advantaged way for families to save for tuition.

“This plan supports our ongoing effort to make higher education accessible to more families,” said Richard Anderson, Southwestern’s vice president for fiscal affairs. “Independent 529 Plan allows purchasers to lock in tomorrow’s tuition at less than today’s price.”

Section 529 Plans, so named for the IRS code that defines them, have gained in popularity over the last decade. Families have been attracted to these plans because, under current tax law, accounts generate no federal income tax if used as intended. Under the 529 tax law, benefits are transferable to other members of the family and refunds are available if the child receives a scholarship or decides not to attend college.

For purchasers, the effectiveness of Independent 529 Plan is not dependent on the performance of the stock or bond markets. Rather, purchasers are actually pre-purchasing tuition at less than today’s prices. The participating schools are removing the investment risk and tuition inflation from the purchasing decision.

“Regardless of whether a student attends Southwestern or another one of the member institutions, Independent 529 Plan represents a way for parents to pay for private college tuition without concern about either investment risk or tuition inflation,” said Anderson.

“Independent 529 Plan proceeds can be used at any of the participating colleges. It’s like buying a gift certificate that can be used at any number of stores,” he added.

Here is one example. If private College A, with a current tuition cost of $20,000, has agreed to honor certificates purchased under Independent 529 Plan, a person who makes a $10,000 contribution into the plan this year would receive tuition certificates that would cover roughly 50 percent of a year’s tuition at College A. This percentage is fixed and guaranteed at the time of purchase, regardless of how high tuition may be at the time a student beneficiary chooses to use the certificates. Because participating institutions must offer a discount (at least a half percent per year) off their current tuition cost, the certificates would cover slightly more than 50 percent of the tuition costs in this example.

Individuals can open an Independent 529 Plan account at no charge as well as locate member institutions and learn about refund policies and other plan features by calling 1-888-718-7878 or by visiting

Some other features of the plan include:

  • No fees of any kind to the consumer
  • A parent, relative or friend at any income level can establish an Independent 529 Plan account for a beneficiary (eventual student) and may also transfer use of the tuition certificates to a wide range of relatives of the beneficiary.
  • Certificates can be rolled over into another 529 plan without penalty.
  • Accounts can be opened for as little as $25 provided contributions total at least $500 within two years. The maximum lifetime contribution limit is equal to five years worth of tuition at the most expensive participating college in the plan.
  • The number of participating colleges and universities may change over time.
  • A beneficiary (eventual student) must apply for and be admitted to a participating institution through the school’s regular admission process
  • Contributions are made on an after-tax basis and any increase in value realized when a tuition certificate is redeemed at a member college will be free of federal income taxes. The tax-free withdrawal feature of all 529 plans will expire after 2010, unless the tax break is extended by Congress.

Tuition Plan Consortium (TPC) is a nonprofit organization formed in 1996 by private colleges to make education at independent colleges and universities more affordable and more accessible for families in the United States. Southwestern University is a founding member of TPC and Mr. Anderson is a member of the Board of Directors.

TIAA-CREF Tuition Financing, Inc. will administer the plan and TIAA-CREF Trust Company will manage its investments. The TIAA-CREF companies constitute a $282 billion leading financial services organization, including the premier retirement system for colleges and universities.

Purchasers should read the Disclosure Booklet carefully before making purchase decisions.

For more information, contact Richard Anderson at or 512-863-1475.


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